House prices fall 1% in July according to latest data from Halifax

UK house prices fell by 1% in July from a month ago, suggesting that growth is “slowing” in the market, according to a mortgage lender.

The Halifax house price index for July fell 1% month-on-month, more than the 0.2% fall that was forecast.

House prices the three months to July were 8.4% higher than in the same period last year, which was the lowest since July 2015. Compared to the previous quarter, prices were 1.6% higher.

The average home in the UK costs £214,678.

Halifax’s rival Nationwide said in its survey on 27 July there was 0.5% increase in July and there was a slight increase in the yearly appreciation rate.

Halifax housing economist, Martin Ellis, said: “There are signs that house price growth is slowing with a deceleration in both the annual and quarterly rates of increase in the past few months. Nonetheless, the current rates remain robust”.

Ellis said it was too soon to determine if there are any effects from the European Union referendum result. He also said that July’s monthly decline largely offsets June’s increase but warned that month-on-month changes can be erratic and falls often happen within an upward trend.

This was echoed by Samuel Tombs, chief UK economist at Pantheon Macroeconomics, who said it was too soon to see the impact of Brexit on house prices from the Halifax index.

Tombs said: “The sharp fall in the Halifax measure of house prices in July likely reflects the usual volatility of the figures, not the impact of the referendum. Prices had leapt by 2.1% over the prior two months, so a correction would have been seen even if the market was in fine fettle.

“Like Nationwide’s measure, Halifax’s index is based on its mortgage offers, which mainly will relate to applications made in June. What we don’t see here is whether borrowers then reneged on planned purchases or haggled price down in July, once they received their mortgage offer.”

He said that house prices look a little less bleak following the Bank of England’s stimulus plan. On Thursday the central lowered the interest rate to 0.25% from 0.5%, which will take a about £22 off monthly mortgage costs on tracker deals.

Tombs added: “Mortgage rates are unlikely to fall sharply, however, as lending spreads already have narrowed considerably over recent years. In addition, the required size of deposits, rather than debt servicing costs, remains the biggest barrier to homeownership for most… In short, then, we continue to expect house prices to drop by around 3% over the next twelve months, as the collapse in consumer confidence subdues buyer demand.”

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Written by: Houseladder